Hendo Inc. is constructing its pro forma financial statements for this year. At years end, Assets were $650,000 and Accounts Payable (the only liabilities account) was $175,000. Sales for the year were $825,000. Hendo expects to grow by 12% this year. Assets and Accounts Payable are expected to grow proportionally to Sales. Common Stock currently equals $175,000 and Retained Earnings are $127,000. Hendo plans to sell $18,000 of new common stock this year. The firm's profit margin on Sales is 5.5%, and 45% of its earnings will be paid out in dividends. How much NEW long-term debt financing will Hendo need this year to finance its expected growth? Hendo is currently operating at full capapcity.

Hendo Inc. is constructing its pro forma financial statements for this year. At years end, Assets were $650,000 and Accounts Payable (the only liabilities account) was $175,000. Sales for the year were $825,000. Hendo expects to grow by 12% this year. Assets and Accounts Payable are expected to grow proportionally to Sales. Common Stock currently equals $175,000 and Retained Earnings are $127,000. Hendo plans to sell $18,000 of new common stock this year. The firm's profit margin on Sales is 5.5%, and 45% of its earnings will be paid out in dividends. How much NEW long-term debt financing will Hendo need this year to finance its expected growth? Hendo is currently operating at full capapcity.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 7P

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